North Carolina auditor: 84 state-run IT projects well over budget, schedule

Scores of IT projects being conducted by North Carolina's government are racking up higher-than-expected costs and going far beyond their planned schedules, a new report by the state's auditor has found.

Auditor Beth Wood's office surveyed 84 IT projects in the state and found that on average, the actual costs were more than double the original estimates and they took 65 percent longer than planned to complete, according to the audit released this week.

The cost overruns totaled US$356.3 million, according to the report.

While restrained in its tone, the audit paints a portrait of dysfunction and lack of oversight associated with the state's IT projects.

For one thing, the Office of Information Technology Services doesn't have a standard method state agencies can use to develop project estimates, according to the report. Nor are there any policies that provide for independent verification of a project estimate after it's made.

In addition, "state agency managers are not required to manage IT projects so that the projects meet the initial cost or schedule estimates that are submitted," the report adds.

The office also doesn't have any measures in place to ensure that it has accurate and complete data regarding IT project oversight. For example, the 84 implementations were chosen because out of more than 1,000 projects contained in the state's IT project portfolio management software, they were the only ones that had the "original cost and schedule estimate data" needed for an audit.

However, the ITS office may be hamstrung in one way, given that it "may not have the authority it needs to ensure that state agencies submit project status reports in a timely manner," the report states.

In a response attached to the report, ITS officials said they agreed with the findings and would work on improvements, including the requirement that state agencies get independent analyses of their project estimates.

But it stopped short of endorsing the auditor's suggestion that ITS ask the legislature pass a law holding state agency managers accountable for meeting budget and schedule estimates, saying instead that "a possible solution is better reporting and enforcement of existing law."

Overall, the audit presents a mixed bag for North Carolina, according to one observer.

"The report is basically saying that the finger to the wind method of estimating projects is not working," said analyst Michael Krigsman, CEO of Asuret and an expert on why IT projects struggle and even fail.

Meanwhile, the apparent willingness by ITS to seek reforms is "a double-edged sword," Krigsman said. "It means [ITS] has been lacking but also means they recognize and accept there's a problem. The lack of defensiveness is very positive."

The question now is what steps North Carolina can take to right the ship. Simply hiring independent people to validate estimates won't solve the problem, Krigsman said. "The difficult part is uncovering the information that's needed in order to make an accurate estimate. That's where you get a rat's nest."

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